better growth, we can go to kimberly. i like to say there is always a bull market somewhere, i promise to find it just for you right here on "mad money." i'm jim cramer. thank you, everybody. see you tomorrow! good evening, everyone. i'm larry kudlow. this is "the kudlow report." let's get started right away. the big story today a shocking but fake tweet and from the associated press and set off a steep stock market selloff and then just as suddenly, a stock market rebound. what on earth happened? cnbc's own eamon javers joins us with this incredible story. good evening. >> it was a really bizarre turn of events starting at 1:07:00 p.m. here's the tweet that the a.p. account put out at that minute. it said, "breaking" two explosions in the white house and barack obama is injured. that was a fake report as a result of a hack attack against

the a.p. twitter account. but it set off this reaction in the dow jones industrial average, as you see from the chart, a huge spike down on that news. down about 143 points at the bottom. and then bouncing right back up, all of that happening within the space of about three minutes. and by sheer coincidence, the white house briefing was set to start, and by tradition, the a.p. reporter gets the first question from the white house. and she had a chance to make a little bit of news of her own, explaining what just happened here. take a listen. >> reporter: i just want to say at the top that it appears as though a.p.'s twitter account has been hacked so anything just sent out about any incident about the white house is false and we'll be putting something out shortly to clarify that. that has happened already. >> the president is fine. i was just with him. >> just a strange, strange story, larry. it's not every day that you see the white house spokesman have to vouch for the safety of the president of the united states from the podium in the white

house. but that, as you saw, was what happened today. the fbi tells me, it is investigating this situation, and the secret service also says it's aware of what's going on here and we'll have to see what happens from here on out. but a very unusual story. and all sorts of questions raised about the role of twitter, the role of markets and the role of media in all this, larry. >> yeah, absolutely. thank you, eamon. appreciate it. actually, stay with us for a bit while we discuss this. next up is our cnbc investigative unit. they put together a short video and animation to explain how the a.p.'s password was compromised. the same thing happened to google not long ago. watch this. >> speak they click on a link and that's all they have to do. the page doesn't open up because there are not actual photos and they move on and decide something wasn't working right. in reality, their machine has just been taken over. completely in a silent manner, malicious software dropped into their machine. you see nothing on your desk top, continue doing your job and someone is now browsing your

file system, downloading key documents. >> one click, and the chinese had breached google. the attackers could then use the compromised computer as a beachhead for further incursions into the network. >> all right. so if hacking is that easy, should investors trust social media when it comes to making trades? here is abigail do little at the seaport group, larry mcdonald, author of "colossal failure of common sense." larry mcdonald, were you trading this thing today? >> i was trading. i had clients doing risk management on the fly. and it was very interesting, because in that type of moment, with what's happened over the last week -- >> that's the key. >> unbelievable. what happened in texas, canada yesterday, boston, most importantly and all those poor people, god bless them. i think you had to react to it immediately. >> all right. abigail, what do you do? social media is not going away. for heaven sakes, you can post company earnings on social media now. so how do you double-check, how do you advise clients? shouldn't they double-check the

news, shouldn't they double-check or triple check the information before they jump? >> i think that's a great idea, that you really do want to use twitter as you would use any other information source. confirm the information. this was such a quick passing of events, really a mini flash crash that it led many investors with little alternative to what larry is talking about. and i think that it really does to speak to not just the uncertainty of the unfortunate events of last week, but last two months. investors are ready to pounce on any information that comes out. and i think that's what you saw today. >> let me go back to my pal, eamon. eamon, in that white house newsroom briefing, carney said the president is fine. but i thought it was interesting that the way this rumor spread, or this hacking spread, that there was a bomb explosion and the president was injured, to what our panelists are saying. people are almost acculturated, eamon, to think the worst now. these disasters can happen, will happen and are going to happen. >> look, absolutely. we live in very scary times.

a lot of us are -- me included, are on twitter all of the time, and treating it as a news feed as we see information come across. this came from what was apparently a very trusted source, but i can tell you what we did in the cnbc newsroom, immediately looked up on our screens where we have live feeds of the white house and a live feed showing inside the white house briefing room at all times. we were able to see that all looked well there. so within seconds, we got a sense there was something amiss here. and then, of course, within less than ten minutes, the briefing started and the a.p. reporter herself, julie pace, was able to set the record straight, and immediately a.p. jumped on this from its other twitter accounts, suspending the one that had been compromised and tweeting out elsewhere this was a bogus report in their words. did everything they could to reel this back in. >> you would have had pand mommy yum if this were true. >> absolutely. and larry, one important point, this tweet just doesn't ring true. as a journalist, you read those words and that is not how the a.p. would put this information

out. so right there, it doesn't ring true. but a lot of the trading here that's being done is not being done by human beings. it's being done by computer-driven al go riths, programmed to take headline news and react in milliseconds. they're now incorporating twitter into a lot of programs, because as you say, twitter is being used to put out company earnings. and so a lot of this isn't vetted by anybody who can make a conscious decision. it's already happened by the time the human beings can get to it. >> but larry mcdonald, the interesting thing was the almost immediate snapback. almost immediate snapback. i don't know whether this was as fast as the flash crash or not. did the flash crash take longer? >> yeah, took longer. >> so this is like really the speed of light. so how does that work? take us into your world. you're actually talking to these guys, trading up a storm. how does that work? >> well, i've been on twitter since '09. 2009. i can tell you right now, maybe a year-and-a-half ago, nobody had it on the trading floor. today every trader that's taking

risk has it in a lot of the sell side and buy side. but the second you see the news happen, you digest it for maybe 10, 20, 30 seconds, try to confirm it. when i heard a.p., that mae made me sew -- my god, that's got to be real and then as the market rallied back -- >> why? >> because you heard that the -- that it was a fake. >> you heard. how did you hear? did you hear? were you on the trading floor? were you at your office? >> i was actually at my office. and actually heard it on cnbc. and kind of come across bloomberg at the same time. >> and so that was definitive. you were prepared. that's pretty coup. you're prepared to take cnbc's word. >> well, i think -- yes. and the market reaction. but i think just to see the denial of -- >> because it would have come out -- we would have broadcast this faster than some of the other websites. >> absolutely. >> you have to wait for websites, somebody has to post it. this is real live television so people are getting news, from the news desk. >> the a.p. denial came out. but i think -- let's take

something away from this. i think going forward, a twitter account with more than 1 million followers, the s.e.c. might force some type of bio control, some type of control where you have to go through a fingerprint check. because 1 million followers, that's serious. >> i agree. >> i'm not sure how the s.e.c. can regulate that. a lot of these are nonmarket focused. i'm not sure how the s.e.c. could necessarily put down a rule like that. >> i think now that we've had this incident, we're less likely to see investors react as quickly. >> i have you've got to check and recheck. like being a reporter. two or three sources before you write up a story. eamon, thank you. we'll see you later in the show. abigail is it going to stay with me, larry mcdonald will stay with me. other big story now is stronger than expected corporate earnings. good story. and apple beat, strong profit in big industrial companies. gave us a big rally today. remember, please, profits are the mother's milk of stocks. all that's up next. and please don't forget my other

dictum. free market capitalism is the best path to prosperity. we'll be right back after this.

it's hard to hit home runs all of the time. is that part apple's problem? >> i don't know if it's a problem, larry. tim cook did say we've got some cool new stuff coming in the fall and in 2014. that might have been what triggered an after hours

selloff. some people interpreted that to mean we don't have new stuff coming in the summer. but will he he also talked about new product categories the team is working on. yes, apple has been coming out with a lot of new stuff over the past couple years, but historically, they have taken longer between some major launches. between the ipod and the iphone, there was about six years where apple was mostly doing software iterations. >> john fort, thank you very much, we appreciate it. by the way, a bunch of industrial companies out with earnings. profits beat expectations again, booming financial sector. let's welcome seema mody. good day. >> despite the fake tweet, the dow closed with a triple digit gain, thanks to better than expected earnings. let's round them up. first, dupont, reporting $1.52 share for the first quarter, 4 cents above estimates. agricultural chemicals. and then there was travelers, insurance company blew through analysts' estimates with a 29-cent beat in earnings thanks to higher premium prices.

shares today did touch a lifetime high. and despite the competition from michael kors, coach, the luxury handbag maker, beat expectations in its top and bottom line. the management says its new footwear assortment has been received very well, and the north american market same-store sales were up 1%, but here's really what the street got excited about. coach upped its annual dividend. nice move in today's trade. >> turned out to be a good day despite glitches. larry mcdonald you have been calling for apple to be more like a bond and you like their dividend and now starting to like their dividend yield. how far will they go? >> in talking to analysts on the street, one thing i've been looking at the next couple weeks, equities around the market paying these dividends, new companies entering the dividend space, so to speak. apple's dividend growth is right now approaching 20%. over the next three years between now and 2015, share count is going to go down, because of this buyback by 20%.

>> does it give it value? does it rescue the stock? >> best part, you have a bond floor developing like we saw in intel. hit 4 to 4.5%. intel stopped falling. most important thing going forward, what's happening right now. the growth investors are leaving the stock, you've got an income growth and income coming up. that creates opportunity, because when you have that -- >> opportunities for apple. >> to get into apple. cuts stocks like that. when you have a change in ownership, that's significant. it creates a wonderful opportunity. because you've got a big group leaving, a big group coming in. >> ann abigail, let me go to you. you're quite pessimistic. we welcome you on the show. you have been ae a pessimist. but things have been more optimistic. you're looking for big, big decline. i want you to talk about that. i want you to tell our viewers why you think we're really headed for a problem. >> well, the reason that i -- my work starts with the technical. so we have seen a strong rally out of november. nearly 20% move up. but it's bearish.

the buyers are becoming less certain up here. and this really mimics what we have seen in the first and second quarter of 2012 and 2011, quite frankly, where we have this competing battle between not so great fundamentals and then the fed liquidity. that doesn't tend to breed trust. in fact, i would say it probably swings things the other way. so even though buyers want to get in on, you know, this bull market, they don't quite trust it. they don't quite feel good about it, especially when you have payrolls coming out sub 100k and recessionary ism. so -- >> that doesn't really -- no. we don't have recessionary, i assume. >> well, close. 51.4. and then flirting around that 50 number. i think what we have seen the last two months, volatility -- >> no end of the world -- i want to challenge you, because i want to make this case. there is no end of the world economic scenario. i may disagree with washington policies or administration policies. no end of the world. that's the point. one of the points for drop in gold. people are looking at stocks,

earnings -- whatever the games that people play about earnings. they are coming in better. i mean, earnings right now rising at 9% in the first quarter. they're supposed to rise at 2%. i know that those -- increases have come down in terms of forecasting. but i don't care. because they're either up or down. earnings are earnings. that's all i'm saying. i don't care about the forecast. i care about the earnings. earnings are the mother's milk of stocks. for your catastrophe to happen, you either need an external event, you need something horrible to happen, or you need a total collapse of the economy. i don't see either. >> well, we're actually talking about two different events. relative to a correction this year, i think that we're looking at something similar to 2011. 10 to 20% off in the second or third quarter, kind of a reaction to this building uncertainty, this volatility we have seen since february. in terms of the bigger crash call that i've been making for more than a year now, as the s&p continues to top out very similar as it did in 2000 to 2007, i think you're right. i think that we are looking at some kind of external shock situation. >> no, no, i'm not -- i'm saying that's what you need to make

your forecast right. i'm not predicting that. i don't see the end of the world scenario. i don't buy it. >> and i hope that bernanke -- >> gold signal. i just don't buy it. and so much liquidity -- seema, are you hearing this end of the world -- all right. let's take abigail. 10 to 20% correction. are you hearing that? >> if the fed pulls back on monetary support sooner than expected, i think there are traders who will see a significant pull back in the markets. that's what i'm hearing. >> when is that going to happen? from the day the fed kept increasing their purchases, everyone has been talking about a pullback. >> so much speculation. will it actually happen. we see jitters in the market when there is any type of chatter they will pull back on monetary support. but at this point, that doesn't seem to be the case and that's why we have seen this market continue to move higher. >> larry mcdonald, i'm going to give you the last word. is anybody willing to admit this is an economy that is rising. however sluggishly. it is rising. that earnings are rising. however slowing -- slow down oh, they're still rising. that there is no end of the

world. that the worst of the story in 2008 and 2009 is over. that, in fact, we're in a massive bull market for four years-plus. i don't care if you call it obama's bull market, congress's bull market. i like to think of it as business's bull market. they're the ones making the money out there. they're the ones restructuring and productivity and let's just call it free market capitalism. is anybody going to acknowledge that? that we are in one hell of a bull market because of what american business is doing? >> the most supportive thing i see is i created this index in my 17 lehman risk indicators aft after lehman fell. they look at things like interbank trust. credit spreads in the big banks around the world. things that typically would be breaking down before a big fall. they were very predictive. >> financial indicators. financial risk indicators. >> this time around, high-yield credit and especially investment-grade credit last two weeks is massively outperforming

equities. >> that's great. >> i have -- what about treasuries? we're seeing treasuries continue to rally. i think we could continue to see e n-year drop. and i think it speaks to some sort of round of risk off. nothing serious. >> you need that. you're not going to get it. i know. i understand your point of view. you want the treasury to go to a buck and quarter and that means we're going to have the end of the world -- >> not going to happen. the next big move in treasuries will be higher in yield. whether it's the fed or the economy or both. i don't know. i've got to -- our producer is screaming at me. abigail dolittle larry mcdonald and seema mody. lingering questions about the boston terror bombing. what law enforcement can do to stop future attacks. former attorney general alberto gonzalez is our next guest up on kudlow.

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here's to good decisions. who matters most to you says the most about you. at massmutual we're owned by our policyowners, and they matter most to us. ready to plan for your family's future? we'll help you get there. a very somber reminder tonight of the human toll caused by last week's heinous terrorist bombings in boston. private memorial service were held today for 8-year-old martin richard, and m.i.t. police officer sean collier. we're also learning a preliminary search of phones and computers used by the bombing suspects finds no indication of an accomplice. joe has said he copied bombs from an al qaeda website.

we're joined by former u.s. attorney general mr. alberto gonzalez, now counsel at the nashville law firm of waller and lanzaen. thank you, sir. we appreciate it very much. i want to ask you, do you buy this story they acted independently. are you yourself satisfied with this story? >> well, i'm not satisfied, because the investigative work hasn't been completed. and so i still think we're in the process of gathering information. it is possible that these individuals learned this technique over the internet. and they got lucky. unlucky for obviously some boston residents. but, again, i think it's too early to speculate in terms of whether or not did they act alone. i think there is more work to be done here. >> i mean, the whole business here -- let me just run a couple things by you. first of all, this very unusual -- obviously, this guy is in bed, he's in the hospital, he got shot up. so he's not answering questions, right. he's nodding his head and they're getting written responses. how much does that interfere with the quality of information

that the questioners, investigators are getting? >> well, of course, it assumes that the suspect wants to provide information. and obviously, when he's able to talk, that's going to facilitate better information sharing. so, again, we're very early in the investigation. obviously, department of justice believes it has a very strong case. if you look at the criminal complaint, it looks very, very solid. but nonetheless, there is a long way to go before we get to a trial. they're in the process now of shoring up the witnesses and the process now of collecting evidence. preserving evidence, documenting evidence, and so we want to -- department of justice is going to be doing everything that it can to ensure that it has a strongest case possible against this individual. >> you know, john gonzalez, i don't have any doubt about the case, they'll make the case and this guy is either going to go to jail for life or -- they're going to kill him. murder rap.

but what i do ask, i guess i'm kind of edgy and crotchety about this, because it just seems like we're seeing this all over the place. in the midwest in shopping centers and new york and the new york -- in the midtown area, the new york federal reserve. you know, what are these? these are young, radical, young, angry, radical, muslims. moving off these websites, moving off mosques, moving off propaganda, radicalizing themselves. it's all somehow linked to al qaeda. and mr. gonzalez, i guess i'm asking what in the lord's name can we do about this? even if these guys are acting alone, they're not alone, because there is this mini universe that is sustaining more of them. and it is so troublesome, sir. >> well, clearly we have some serious challenges here in this country. and i -- ever since 9/11, and as i speak about this issue around the country, i've always said, it's not a question of if there is going to be another attack.

it's a question of when. we've done a lot to make america safer, but we are not yet safe. and clearly, because of our foreign policy, because of the freedoms we enjoy, there are individuals here in this country and certainly around the world who do not like america. they want to bring harm to america. and it's for that reason that we do have all of the laws we have put in place following 9/11 to ensure that we make america safe as possible, consistent with the protections provided under the constitution. >> okay. but do you think new york police commissioner chief ray kelly, who is probably one of the greatest in the history of the city, all right, really. they, of course, have a whole anti-terrorism, counterterrorism unit. they also, general gonzalez, they also monitor the muslim community. that is not to say that all muslims are radical jihadists, but they do monitor the muslim community. they take a lot of flack for it

from liberals and left and certain media people. but that's what they do. when you look at this story, sir, in a sense, i hate to say this, but it's all the same. all these things. young, radical muslim men. radical jihadist. it's cookie-cutter. kelly wright. are we going to have to have the fbi and other law enforcement agencies starting to monitor the muslim community? >> we don't know that that isn't already occurring, do we? by the way, i've been in the new york command center and it's quite impressive and they have quite a professional operation there. to deal with terrorism threats to the city of new york. but absolutely. if we have reason to believe that there is a possible threat within a certain community, within a certain facility or building, yes, there is going to be some extra detection put in place by law enforcement and that's smart. that makes sense. but obviously, we live in a country where you're presumed innocent until proven guilty and you do enjoy certain liberties and certain freedoms.

and so law enforcement community has to be mindful of that. but let's not kid ourselves. listen, if there are indications that there is something going on within a group, within a setting, then federal law enforcement as well as state and local law enforcement are going to be very attentive to what's going on there. >> all right. thank you for that. again, like you, sir, i'm not suggesting for one minute that all muslims are part of this craziness. i'm not suggesting that. i'm just suggesting there has to be ways and means of law enforcement, and you agree, at the rate -- that's the kind of thing that may have to go on. and you're probably right. more of that is going on than we recognize. former attorney general, alberto gonzalez, we thank you very much for your time. pleasure to see you. >> good to be with you. now, it's not just about airport delays anymore. more sequester spending cut pain is coming out of the irs intends to furlough workers and maybe even some folks who get meals on wheels are going to get hit too. but you know what? i still think this is a phony

crisis, aimed at a $1.2 trillion tax hike because federal agencies cannot get their priorities in order. we've got proof. we're going to show you something. stay with us. kudlow. i know what you're thinking...

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all right. first up, as airport delays mount to the faa is blaming the spending cuts sequester, forcing thousands of air traffic controllers to take unpaid

leave. but republicans blame the obama administration for selectively choosing which cuts would make us all feel the most pain. take a listen to kansas senator jerry moran earlier today. >> it seems as if politics is playing a significant role in the determining what actions the faa are taking, and every indication that i have from conversations with my colleagues is it emanates from the white house. >> all right. here to talk about what i call the phony crisis and the obama democrats' attempt to raise $1.2 trillion in taxes is texas republican congressman, vice chair of the joint economic committee, my friend brady. and democratic strategist steve mcmann and townhall.com's guy benson here with me. mr. kevin brady, welcome. i know you blasted the irs for their fur lows. but i want to just put up -- i don't know if you can see this, probably not. i'm going to read the numbers. we're going to show you that the

faa has had a massive -- that's the blue line. they've gone from about $2 billion all the way up to over $5 billion in their operating budget since 2008. they're off the pink but still very high. and at the same time, the faa has gotten this massive increase of $2 billion to over $5 billion. traffic, domestic traffic, has plunged. has plunged from -- let's see. from 11 -- almost 11el million flights down to 9.5 million flights. so more money chasing fewer flights and furloughing workers to make life hard. what's that about? >> these are the priorities of government. and they would be absurd if they weren't just outrageous. they whose -- faa chose to prioritize air safety and passenger service, chose inflict as much political pain as possible on the traveling

public. they have the money. as you pointed out. and they have a lot less, what i would say, frivolous spending on conferences, consultants, supplies, that they could be, frankly, prioritizing for -- another thing is, a year-and-a-half. since the sequester law became law to set priorities. and now they furlough not nonessential transportation workers. air traffic controllers, and they furlough them as much as the busiest airports in america, in the same ratio they did the smallest -- it doesn't make sense. >> that is totally key. they make no distinction. steve mcmann. they make no distinction between essential and nonessential. no distinctions between these small little towers and, of course, the big city towers. and, again, i come to this chart. maybe put it up on the full screen again. they have had a gigantic increase in their budget and i mean gigantic increase, while domestic traffic has gone down. what is that about? >> the choices are made in washington every day.

and congress has chosen not to repeal the sequester and not to replace with other spending cuts. maybe they should, maybe they shouldn't. >> $2 billion to over $5 billion spending in a couple years. >> 10% is 10%. this sequester passed with a lot of republican votes in congress because the republicans thought it was a great idea to control spending but cutting across the board 10%. that's what's happening. being cutin discriminately across the board by 10%. nobody in congress has done anything to fix it. democrats or republicans. >> not 10%, 2%. >> it's actually less -- >> between now and the end of the year. >> it's less than 2% of the total -- >> of the total budget. >> >> it's a reduction in the rate of increase. important to point out. >> as a percentage, though, of what remains to be spent this year, 10%. >> see, kevin brady, i've got to go to you. you're on the ways and means committee also. kevin, from day one, at least on the senate side, and the white house side, they have opposed the sequester spending cuts, and using the president's budget and

senate democrats' budget, kevin brady, they want to substitute a 1.2 trillion tax hike in place of the spending cuts. >> that's at the heart of this. and look at this. the president proposed the sequester, threatened to veto any bill that changed the sequester. now he's on the other side and really just trying to use as much pain on the american taxpayers as he can possibly create in order to justify higher taxes, more spending, more deficits. everyone knows what this play is all about. >> go ahead, steve. fight back. >> well, congressman, wasn't john boehner in the room? wasn't mitch mcconnell present for this sequester? >> absolutely. >> so why are you saying it's the president's deal? >> it was the president's idea. and he just signed a bill -- >> have you guys -- >> to lock in these sequester levels. >> by the way, that's not true,

steve. hold on a second. all these guys on the appropriations committee in both the senate and the house have offered to liberalize rules for sub accounts. by the way, the administration has a lot of leeway on sub accounts. guy benson, i come to you again. okay, i'm in favor of the darn sequester. it's not perfect. but some place, sometime, you've got to cut spending and i would rather do that than raise taxes. >> i agree with that, but do it in a slightly smarter way. >> that's what i'm asking. >> they passed laws that would replace sequester. the president, his idea. he signed it into law. >> how did it pass congress? >> bipartisan basis. and then senate republicans said hey, mr. president, let's give more flexibility. and he said no, i'll veto that -- if you give it to me. i don't want the flexibility. >> the president wants the congress to fix it. that's their job. >> no he wants the -- the president wants the congress to end the spending cut sequester and raise taxes. let's be serious. he does not want to tweak the spending cuts.

he wants to end the spending cuts so he can raise taxes. you know it and i know it. and kevin brady knows it. thank you, mr. brady, we appreciate it. >> thank you. >> very much. now, folks, some more bad news. i don't know. a huge insider trading scandal broke earlier this month. a washington lobbyist tipped off some investors to an $8 billion increase in government health care spending. now, cnbc's eamon javers has new details about this grisly story. once again, good evening, eamon. >> good evening, larry. the new details are that the law and lobbying firm green and troutwig has received and is responding to a subpoena from the s.e.c. in this matter. they are involved in a situation here, because the allegation is that a separate firm called hight securities sent a tip to wall street clients that changes were coming to medicare. there was an employee involved in the chain of communication of e-mails of some of this information. now greenbergtroutwig also saying today they're going to get out of the business of

so-called political intelligence. that's when firms in washington tip off hedge funds and others on wall street about things that are happening in washington. here's the statement from greenbergdrawer i go. we have concluded that providing government services in an entity may lead to misunderstanding and unintended use of services, even when compliant with legal and ethical standards. hight is no longer a client and we will not represent such firms in the future. larry, i should say, there is nothing to indicate here that greenberg or hight securities necessarily did anything wrong here. but investigators are trying to get to the bottom of what happened in this situation, larry. >> all right, eamon javers, thanks very much. so look, mark hayes, a lobbyist for humana, an independent lobbying firm, he did the work. he found out that instead of cutting back on medicare providers and so forth, they actually were going to increase a little bit. that was sent out to this firm height, who then e-mailed to their clients. guy benson, democrat, republican, whatever.

this is washington at its worst and dirtiest. >> it's what washington does and will have an investigation to see if there is any legal wrongdoing. i think it actually shines a light on a bigger issue here, which is medicare itself. this is a teachable moment, as the president might like to say. medicare cuts and government price controls and medicare never happen. or they happen to a lesser extent than how they are scheduled to be, because there is no political appetite for it. we can't go about saving medicare by doing these random across the board cuts. we have to actually reform the program for future seniors. >> okay. >> this guy was just offering the president as an authority and citing -- i thought that was good. >> let me go back to this issue, political intelligence. okay. this guy, mark hayes, he didn't break any laws. but i want to ask you, should there be laws about this. >> should be. >> this whole sort of inside cronyism thing, again, i'm not -- it's not republican/democrat, it's just sleazy. >> well, there probably should be -- there should be laws. and the it tip gets to wall street and folks in wall street,

you know -- it was a huge market mover. >> you're right. humana, united health care, united group, they all soared when they heard they were getting money instead of losing it. >> and the question is, at what point does publicly -- it's actually not publicly available. but it's information in the public realm that gets tweeted. at what point does that become insider information you can't trade on? >> yeah. >> by the way, the other thing -- i just watched that quote, that statement there from the firm. not saying anything legal but the notion they had no idea this maybe could cause a problem for them at all -- >> yeah. well, the other guy -- in the original story this guy hayes said he couldn't sleep at night because he didn't know they were going to do that. >> why did he send it to them? >> that's why they're paying him. it's got to stop. we've got more. former governor jon corzine being sued by a bankruptcy trustee for being grossly negligent and allegedly causing the collapse of mf global. he's become a professional defendant, and he's going to have to pay up some serious cash before this is over.

we have the latest on that story on "the kudlow report." please stay with us.

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former new jersey governor jon corzine and two other executives sued over the failure

of mf global. kayla tausche has that story. >> former ceo jon corzine and his two deputies getting hit with a 61-page lawsuit from louie free, the bankruptcy trustee in charge of the estate. free is suing on three counts of breaching fiduciary duties as the firm collapsed in 2011 saying corzine veered away from strategy, instead reaching out to investment banking even as its risk controls remained weak. there are seemingly similar claims lobbed at the executives in u.s. bankruptcy court since the brokerage's failure 18 months ago. the previous suits, including one filed by directors at the cme which cleared the commodity trades. a spokesman for corzine calling the latest suit, quote, monday morning quarterbacking, and one that excluded actions by mf global's counter parties, draining the company's liquidity in its final days. a statement from free noting the

parties were still negotiating with a mediator to reach a resolution. so why the lawsuit if they're still trying to settle? timing is everything. according to procedure, a lawsuit from freeh would have to come before the firm goes into final liquidation. still, though, larry, no charges on this case from regulators. back over to you. >> all right. many thanks. now back to our panelists, steve mcmann and guy benson. i don't know why the regulators haven't made any charges, but louie freeh, former head of the fbi. as i understand, is going to attempt to make mr. corzine pay some cash. as a result of his mistakes. by the way, which included taking 1.6 billion out of customer accounts at one point, although the money has been recovered. in other words, for the first time in one of these financial crackups, one of the principle managers is going to have to pay cash. i rather like that. >> i think that will have a lot of populist appeal. and as we saw the statements there, dulging between free and then the corzine lawyers, if

it's going to be a he said/she said, at least in public opinion, i think when you talk about louie free, as you pointed out, larry, being the former fbi director, that's some real chops there coming into this. and as a native new jerseyan, i think a lot of us aren't really that surprised to see jon corzine embroiled in another example of poor financial stewardship. and it will be very interesting to see whether or not he takes a hit in his wallet. >> that's the thing, steve mcmann -- a lot of people -- it is a populist view. but it's sort of like the principles, the main managers of these big financial companies that got into a heap of trouble, never really had to put up any of their own money. now, they may not have received stock, but they never had the stock in the first place. so what i'm saying is, this sounds to me -- if i have this story right, that free wants corzine to pony up some cash, and this is going to set a whole different tone and template to these failures. >> absolutely. and i'm not suggesting -- i don't know the facts and whether senator -- >> i don't either.

>> did anything illegal or even was grossly negligent. but there is no question this is a slippery slope, if you're running a great big hedge fund, running a wall street institution. here you've got the person who ran the fbi, who does have enormous street cred going after one of these fat cats. >> yeah. >> and, you know, maybe not going after him criminally but going after where it's going to hurt almost as much, in their big fat pocket. >> i think so. and i think main street will like that. sorry we don't have enough time. we've got to move on to yet another story. the evidence seems to be mounting now that the assad regime in syria, in fact, has used chemical weapons on their rebel forces armies. will president obama acknowledge this and keep his red line promise to intervene? that story, next up. i'm telling you right now, the girl back at home would absolutely not have taken a zip line in the jungle. i'm really glad that girl stayed at home. vo: expedia helps 30 million travelers a month find what they're looking for. one traveler at a time.

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all right, today israel is asserting there is evidence the syrian government repeatedly used chemical weapons last month. britain and france are backing up israel's story. question, has syria crossed the obama red line? here now we bring in our friend, syndicated radio talk show host john bachelor, steve mcmann, guy benson still with me. great to see you. >> good evening, larry. >> who is right, who is wrong? britain backs up israel, france backs up israel. united states secretary kerry and hagel say there is no evidence. who is right, who is wrong?

>> my information is there is no conclusive medical evidence that a lethal chemical weapon or anything as damaging as sarin, which was implicated in the report from israel from a conference was used. no conclusive medical evidence. there is soil sample that points to sarin. there is no explanation why that was used. in the march 19th incident, the chief victims were the regime's own soldiers. so while the assad regime remains bloody-minded, not this time, larry. no conclusive evidence. >> ll, it mean -- all right. no conclusive evidence. is there semi evidence? are you saying, john, that israel's -- it's israel's intelligence agency, as i read this story, making this charge. i don't think minister, prime minister netanyahu has actually said this. but where does this lead? where does this debate lead? does it put heat on the obama administration? just explain. walk us through this. >> i will. secretary hagel, his first visit

to the region, his conversations with israel. the concern here is the word "red line." you recall the prime minister used that at the united nations last fall. the president of the united states and the secretary of state, mrs. clinton, have used the word "red line" with regard to certify i can't, netanyahu used the word "red line" with regard to iran. right now, my information is that jerusalem, israel, the government, is looking to task the obama rhetoric. will they move on syria. because if they won't, that tells israel that the word "red line" has no significance, and therefore, israel has to recalculate its approach toi iran. the politics of this trump the medical facts on the ground. >> steve mcmann, will the president move, if they do find physical evidence of these chemical weapons? >> i think he will. the question is what does movement look like. we intervene, but who are we supporting and where does that support lead? and does it lead to a better situation or worse situation?

and is the line really red? remember, we had this conversation about weapons of mass destruction with respect to iraq. and it turns out there weren't any, or at least we couldn't find any. until there is conclusive, scientific evidence, medical evidence, that the red line has been breached, i don't think -- i don't think this is an issue for the obama administration to wade into. and frankly, i don't know what they would do anyway. >> guy benson, two new players, very important. secretary of state, john kerry, secretary of defense chuck hagel. do they move the ball to the soft part or the hard part? are they warriors or are they wusses? how do you read this? >> that's quite a dichotomy. a little softer. but there have been indications from both of them, actually, in the last week or two that maybe there is some military action coming with syria. because, look, israel -- say what you will. they have to have good intelligence on the ground about the middle east. for self preservation. they have really good sources. and it's not just israel saying this. as you pointed out the beginning of the segment, great britain and the french, they have both

said -- >> john bachelor, just in the waning moments here, i'm surprised, but, you know, great britain and france are backing up israel on this. that tells me something is going on. give you the last few seconds. >> the politics of this are critical. i will give you the evidence when i have it. otherwise i'm not going to go along with something i haven't been given. >> thank you. that's it for tonight. thank you, everybody. i'm larry cuddly. we'll be back tomorrow evening. i know what you're thinking... transit fares! as in the 37 billion transit fares

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